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A vital piece of advice given to every investor is to ensure that their portfolios include a diverse range of investments. The idea behind this is to balance out risks and maximise gains. Low-risk investments tend to bring lower returns but offer protection against loss from market volatility. 


On the other hand, high-risk schemes have a higher potential for returns with a greater exposure to risk. As such, the selling point for low-risk investments is the assured returns and stability they promise. 


A fixed deposit, or FD, is one of the most popular low-risk instruments in India. Meanwhile, real estate investments are high-risk, carrying emotional value and personal interest for investors. 


Both are seen as lucrative for different reasons. Therefore, as an investor deliberating on FD vs real estate, it may be tough to decide which one is a better bet for your goals. Read on to know more about the features and differences you should note when comparing real estate vs FDs.

Differences Between FD vs Real Estate

To analyse which option is ideal for your needs, consider these parameters to understand investments in real estate vs fixed deposit: 


Fixed Deposit

Real Estate


Interest earned is fixed at a predetermined rate, ensuring the stability of returns.


However, these returns may not be high.

Returns depend on market movements and have the potential to be high.

But they can also be low due to a drastic drop in value. 


Low-risk, making it suitable for risk-averse investors.

High-risk, suitable for investors who have a higher risk tolerance. 


Minimum deposit amount starts as low as ₹1,000. 

This is subjective to the property type and the region it is located in. Depending on the locale, you may need several lakhs of rupees to invest. 

Additional Expenses

This is a one-time deposit. There are no additional expenses, excluding penalty charges.

Real-estate investments have additional expenses* that reduce your final returns and can consistently put pressure on your finances.


The process of opening an FD and receiving the matured amount is transparent. Only trustworthy financial institutions offer FDs. 


You can access their public records and ratings from different sources, such as ICRA or CRISIL. This gives you a comprehensive idea of the issuer’s credibility and liabilities.

In comparison to FDs, real estate is not as transparent. Too many variables and stakeholders are involved, and the regulations or laws may not always shift in your favour. 


Investors are relatively more vulnerable to scams or fraud in the case of real estate.

Additional expenses in Real Estate

Add-on expenses include infrastructure, maintenance, security, registration, ownership title, stamp duty, etc. Due to these additional expenses, some cases of property investments have shown a guaranteed rate of returns of only 2.5% p.a.

Investing in - FD vs. Real Estate

1. Investing in Real Estate

The potential for high returns is what draws investors to real estate investments. However, there is also a significant risk associated with it. A common perception of property prices is that they will always go up. 

While many witnessed a drastic rise in property value and returns in the past, it is also possible that they may drop or plateau at some point. Whether you pick FD or real estate, you need to know how to invest. For those interested in real estate, rental properties are an option. Switching houses tactfully can also bring gains. 


You can also buy real estate using leverage and pay the partial cost up front and the rest with EMIs. A more hands-off method includes real estate investment groups and Real Estate Investment Trusts (REITs).


Here are a few features to remember while comparing FD vs Real estate investment:

  • Land or properties require a greater investment amount as compared to the sum required for an FD

  • Extra expenses such as registration and maintenance charges also add to the total cost

  • In times of economic slowdown, the property value may suffer considerably or may not appreciate as expected

  • Property value should be evaluated in comparison to market rates prior to investment

  • Factors such as infrastructure, connectivity, and locality all influence property value

  • Rental or commercial investments can both act as sources of income 

2. Investing in Fixed Deposits

Fixed deposits are schemes that involve depositing a sum of money with a financial institution for a stipulated period. This deposit earns interest at a fixed rate over that duration.


The appeal of an FD lies in the rate of interest, which is higher than that of a savings account and remains unaffected throughout the tenor. The higher interest rate is due to the lock-in period and lower liquidity that comes with an FD.


Here are a few features to remember while comparing real estate investment vs fixed deposit: 

  • FDs offer guaranteed returns, but these may not be as high as other schemes

  • FDs are stable instruments that you can withdraw or renew at maturity

  • Premature withdrawals are subject to penalty charges

  • FD interest rates in India range from 6-7% at public banks, going up to 8% or more in private or foreign banks

  • Tenor can vary from 7 days to 10 years

  • Minimum deposit amount can be as low as ₹1,000, making it an affordable option

  • Interest earned on an FD is taxable, and the deducted amount depends on the total earned interest and income slab 

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Final Thoughts on FD vs Real Estate

Real estate investments attract investors for a number of reasons. This includes the prospect of great returns, the opportunity to get recurring income, and the ownership of the property. 


However, the influence of market changes makes it a high-risk avenue with no stability or guarantee of returns. Moreover, many invest in real estate after availing loans, whose repayment, along with additional expenses, can eventually become a significant burden.


On the other hand, although the returns with FDs may be lower in comparison, fixed deposits offer security and stability. If your priorities are assured returns from an affordable investment, FDs are the answer to the real estate vs FD debate.


Banks, NBFCs, and other financial institutions throughout India offer FDs. In fact, you can invest in reputed schemes from leading issuers, like the Bajaj Finance FD, on Bajaj Markets. 


In the fixed deposit vs. real estate investment debate, choosing one or the other can be tricky. Ultimately, the key is to assess your goals, risk tolerance, and financial condition as an investor to find the best option.

FAQs on FD vs Real Estate

For those interested in real estate, rental properties are an option. Flipping houses can also bring gains, or you can buy real estate using leverage and pay the partial cost up front and the rest with EMIs. A more hands-off method is real estate investment groups, and Real Estate Investment Trusts (REITs) are another option.

Add-on expenses include infrastructure, maintenance, security, registration, ownership title, stamp duty, and more.

You can browse a variety of investment options on Bajaj Markets - a one-stop platform for all your financial needs.

FDs are generally considered safer with predictable returns, while real estate can offer potential appreciation and rental income but involves higher risks and management responsibilities. The choice between real estate vs FD depends on individual financial goals, risk tolerance, and investment horizon.

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